TAIPEI’S CITY Hall is so proud of its mass rapid transit (MRT) system that
it runs a competition every year, asking people to send in poems about the MRT.
I can see why. The MRT is clean and comfortable (in addition to chewing gum, the
nasty habit of betel chewing nut has been banned). People queue up in a
civilised fashion before boarding trains. And, when the doors open, they don’t
barge in before passengers can exit.

Signs and announcements are in Chinese and English and all carriages have
electronic displays showing which station is coming up next. Every carriage has
special seats for old folks, pregnant women or people with disabilities. I’ve
never seen fit, young people pretending to be asleep in these seats.

However, the best part about Taipei’s MRT is its frequency. According to
Taipei Rapid Transit Corp (TRTC), the company that runs the system, trains
arrive at two to four-minute intervals at peak hours. Off-peak, it is four to
seven minutes.

In reality, it is much more frequent. I know because I’ve timed it. At peak
hours, trains come as often as every minute. As for off-peak hours? Well, I’ve
never had to wait more than three or four minutes. As a result, even during the
morning rush hour, the trains are never as packed as they are in
Singapore.

TRTC has won praise not just locally but internationally. It has been
ranked No 1 for reliability for four straight years (2004 to 2007), according to
the Nova/CoMET International Railway Benchmarking Group (of which Singapore’s
SMRT Corp is also part).

All this got me wondering just how TRTC is able to deliver such a
world-class MRT service. Perhaps, it doesn’t have to transport as many people as
in the crowded Lion City? Perhaps, it’s government-owned and isn’t under
pressure to make as much money as possible and can run more trains?

So, I pulled up some numbers (see table). And the broad conclusion is that
Taipei proves it is possible to offer a high-quality, high-frequency and
affordable MRT service without losing money. It also suggests that certain
services, such as public transport, tend to function optimally as natural
monopolies and ought not to be owned by companies that seek to maximise
profits.

Let’s look first at the one common element between the two: the cost of
taking a train. Average ticket prices in Singapore and Taipei are about $1. This
is pretty low by international standards, as anyone who has had the misfortune
to take the London Underground knows.

Singapore and Taipei are also pretty dense cities, but the latter packs
more folks (5.5 million of them) into a smaller area (272 sq km). In comparison,
Singapore is home to 4.6 million residents spread over some 692 sq km.

As such, in terms of coverage, Singapore’s network of five MRT lines is
more extensive, totalling 109.4km, versus TRTC’s 74.4km network. However, TRTC
has more stations on its smaller network, which means less distance between
stations and greater convenience for commuters.

MORE TRAIN RUNS IN
TAIPEI

Just how many people take the MRT each day? In 2007, Singapore’s MRT moved
an average of 1.56 million people a day. That’s just over a third more than what
TRTC transported last year. So yes, TRTC’s network is smaller and it moves fewer
people, which is one reason it feels less crowded.

However, what is illuminating is the difference in frequency. Last year,
TRTC made an average of 2,171 train runs a day. SMRT clocked in at just over
1,000 a day for its fiscal year ended March 2008. This is not strictly an apples
with apples comparison. SMRT’s system is older, has heavier loads and travels
further than TRTC’s — factors which play a role in how often trains can be run.
The comparison also doesn’t include data from SBS Transit, which runs the North-
East Line. But, as SMRT accounts for more than four fifths of total MRT
ridership, it is fairly representative of the whole picture.

Since February this year, SMRT has added about 900 extra train trips each
week. According to the company, on average, its train frequency during peak
hours is between two and five minutes. During off-peak hours, it is now between
3.5 and seven minutes. Given the existing signalling system and infrastructure,
its average peak-hour frequency puts it among the top 20% of the world’s major
metro operators, SMRT adds.

Still, it’s safe to assume that its bumped-up frequency continues to lag
TRTC’s. And this, to an extent, is reflected in SMRT’s bottomline, which is much
heftier than TRTC’s. In FY2008, SMRT’s rail operations saw revenue of $436.9
million. Earnings before interest and tax was $129.3 million. In comparison,
TRTC saw approximately $415 million in fare revenue in 2007 and just $41.3
million in pre-tax profit.

TRTC is 73.75% owned by the Taipei City Government. The Ministry of
Transportation and Communications owns a further 17.14% while the Taipei County
Government owns 8.75%. Clearly, public-listed SMRT’s returns on its rail
operations are far better for its shareholders than TRTC’s. However, TRTC —
which has been profitable every year except its first two — is better for its
commuters, who have been inspired to pen a poem or two in praise of their
well-regarded metro.

Sunita Sue Leng, previously an associate editor at The Edge Singapore, is
now based in Taipei and writes on Greater China issues

How
unusual, and how refreshing, to delve into a book that places Joseph
Haydn's first tour to London, Richard Wagner's opening of his Bayreuth
opera house, and the death of Mozart alongside a paragraph that begins:
"Inside the world of hard rock - traditionally a citadel of
uncompromising masculinity - the turning point was the death of Freddie
Mercury, the lead singer of Queen, from an AIDS-related illness in
November 1991."

In The Triumph of Music , Cambridge
historian Tim Blanning describes the story of western music with
confidence, sweeping from the question of how and when composers began
to write for posterity, rather than for more ephemeral purposes, to the
consequences for jazz of the death of John Coltrane, and the place of
mass market popular music in the social changes of our own time. He
never loses touch with the seriousness of his mission yet juggles his
sources and his observations in a dazzling and high speed display. It's
a formidable achievement.

Blanning abandons the linear approach
and deals thematically with his subjects - the composer's calling, the
nature of audiences and their patterns, the imperious march of music as
the dominant art. Discussing music's "places and spaces", for example,
he describes with a clear overview how composers were able to emerge
from the church and the great house to the opera house and the concert
hall, and how a kind of democracy was achieved. As a historian rather
than a musicologist, he gives a convincing explanation of the "triumph"
of his title, showing how the development of the composer in the
western classical tradition marched together with the popularisation of
music, and with what consequences.

In asserting that "music is
the most romantic of all the arts," Blanning maps a masterly course
from the court of the Sun King, obsessed with performance, through the
classical period to the 19th-century romantics who were able to fuse
ideas of heroism and artistic introspection with such bewildering ease.
Blanning's treatments are short - he deals with "Bach, Handel and the
Worship of God" in three pages, for example. But he conjures up such a
pace that only a weary pedant would want to stop along the way.

Underlying
his enthusiasm is the idea that even non- classical music-lovers often
have a feeling for the tradition. They understand that a Beethoven
symphony plays a heroic part in our story; that there is something
about the Italians and opera that helped to shape the country; maybe
even that there is a connection between a 20th-century tunesmith and
the old masters of the art song.

It is easy to imagine a po-faced
browser picking up this volume, noticing that the first illustration is
of Brian May with his guitar on the roof of Buckingham Palace at the
Queen's Golden Jubilee, and dropping the book in horror. That would be
a mistake. The urges that drive composers and performers cross the
centuries and every genre, and they're explained more clearly when the
story is told in this manner. Above all, it's important to demystify
the social story of music. Genius - even mere brilliance - may be
impenetrable; surely Mozart's "divine simplicity" can't be reduced to
anything more. But everything else can be explained - how audiences
changed; how musicians refined their techniques and found new
instruments; how music played its part in politics and social change.

Blanning
is too sensitive a cultural historian to suggest that the story is
fascinating simply because it can be told. He is driven by a belief in
the power of music, a feeling for its permanence. He writes with
passion and manages to cast such a wide net that he never needs to
pause to make that case: its thread runs through every page. This is a
believer's book, to be savoured.

James Naughtie is a presenter on 'Today' on BBC Radio 4 and author of 'The Making of Music: A Journey with Notes' (John Murray)

'Generation zero' steers growth

Sixty-two-year
old Sheriff Wang is a member of "generation zero": born and raised
before China had a modern car industry (or for that matter, private
property).

In the past generation, China's car market has leapt
from almost nothing to the second largest in the world - and that has
meant a lot of driving lessons. And though Chinese car sales have
recently faltered, in line with the global slowdown, China's driving
schools still have plenty of pupils. Only 20 in 1,000 Chinese own a
car; China will provide learner drivers well into the next decade and
beyond.

Mr Wang is one of them: this neat and dapper pensioner
spends his mornings practising parallel parking and three point turns
on the deserted roads of a disused airport outside Shanghai, at the
Shenhao driving school. He sits hunched tensely over the wheel of one
of the school's bright yellow Volkswagen Santanas, grinding the gears
and applying too much pressure to the brakes, just like learner drivers
everywhere. In the back seat sits his 38-year-old son, who is also
learning to drive for the first time.

Shi Zhibing, who manages
the school, says students like Mr Wang are motivated by what he calls
"dream fulfilment": "Some old people just want to fulfil their youthful
dreams of having driving lessons," he says, adding "they don't even
have a car. Some don't even want to drive."

In fact, says Mr Shi,
90 per cent of the students who pay him Rmb5,000 (€520, $730, £497) to
learn to drive do not own a vehicle. For that reason, he says there has
been no drop in pupils ready to learn to drive, despite the global
economic slowdown and its impact on car sales in China. He says 60 per
cent of those who pass the stringent Shanghai driving test will
eventually buy a car and some others will drive a company car at work.

But
for others, such as Mr Wang, learning to drive is about recapturing a
lost youth that was out of reach in the China he grew up in. He wants
to learn to drive "so there will be more fun in life", he says,
explaining that Chinese people view those in their 50s and 60s as
elderly, but he is convinced that he is "young enough to do this". He
took early retirement from his job as a sheriff at the age of 50, owing
to back problems.

Now Mr Wang wants to pick up his grandchildren
from school, help with errands and household chores, and take the kind
of short road trips to local tourist attractions that Chinese people
are only now beginning to embark on - something that, for generation
zero in its youth would have been "simply unimaginable". In classic
Chinese fashion - where the young are meant to look after the old - he
thinks it is up to his son to buy him the car he needs to fulfil his
youthful ambitions.

But it is not only generation zero that has
caught the car bug in China: generation Y (the 1980s and 1990s birth
generation) is wild about motoring too. Tao Han and Du Zi Juan are two
ladies in their late 20s who learned to drive at the same school as Mr
Wang.

They bought a car on the same day, and applied for a
driving licence on the same day - and since then they have belonged to
the Kitten Car Club, an enthusiasts' club for women drivers. They
embark on a weekly karaoke outing, and learn how to change their tyres
and refuel on the Kitten Club website. Their ambition is to "eat fish
head soup in Zhejiang province", not too far from Shanghai (to go
further, they need an experienced driver who can read a map, they say).
So far, their longest excursion has been to Wu Xi, 400km away. Ms Tao
boasts that she drove 180kph on that trip. She aspires to buy an Audi
R8, despite its Rmb1.8bn price tag: "I can't buy it now, but one day,
if I grow my business enough, I'll buy it".

For the moment, both
generation zero and generation Y may have to pause to reflect on the
global economic crisis: but in the longer term, the demographic
pressure is undeniable. In China, 20 in 1000 people own a car; in
Europe and the US, at least 500 in 1,000. The simple maths will drive
Chinese car enthusiasm well into the future.

December 25, 2008

A
Tintin blockbuster is on the way. Baffled Americans hoping to
understand him should look at him through the prism of post-war Europe

Moulinsart-Studios Herge

IT
IS one of Europe’s more startling laws. In 1949 France banned
children’s books and comic strips from presenting cowardice in a
“favourable” light, on pain of up to a year in prison for errant
publishers. It was equally forbidden to make laziness or lying seem
attractive. The law created an oversight committee to watch for
positive depictions of these ills, along with crime, theft, hatred,
debauchery and acts “liable to undermine morality” among the young.

Taken
literally, the law suggests that an ideal comic-book hero would
resemble an overgrown boy scout, whose adventures involve pluck, fair
play, restrained violence and no sex. That is a pretty accurate
description of Tintin, the Belgian boy reporter who enjoyed spectacular
success in post-war Europe.

Tintin’s
slightly priggish character fitted the times. His simple ethical
code—seek the truth, protect the weak and stand up to bullies—appealed
to a continent waking up from the shame of war. His wholesome qualities
help explain the great secret of his commercial success—that he was,
and remains, one of the rare comic books that adults are happy to buy
for children.

But probity
cannot explain why Tintin became a cultural landmark in Europe, as
important on his side of the Atlantic as Superman on the other. There
were plenty of wholesome comics in post-war Europe, most of them justly
forgotten. Something else in Tintin spoke to children and adults in
continental Europe. Even in the straitened years of post-war
reconstruction, he was soon selling millions of books a year.

Admirers
point to the quality of the drawing in Tintin, and the tense pacing of
the plots, and they are right. Any child reared on “King Ottokar’s
Sceptre”, a Balkan thriller; or “The Calculus Affair”, about a
scientist’s kidnap, will later feel a shock of familiarity when
watching Hitchcock films or reading Graham Greene. It is all there: the
dangerous glamour of cities at night; the terror of a forced drive into
the forest; a world of tapped hotel telephones and chain-smoking
killers in the lobby downstairs.

Yet even
excellence does not explain Tintin’s success in Europe. For, despite
his qualities, Tintin has never been a big hit in the Anglo-Saxon
world. In Britain, he is reasonably well known, but as a minority
taste, bound within narrow striations of class: his albums are bought
to be tucked into boarding school trunks or read after Saturday morning
violin lessons. In America, Tintin is barely known.

All societies reveal themselves through their children’s books. Europe’s love affair with Tintin is more revealing than most.

Any
exploration of Tintin’s hold on continental affections must start not
with culture, but with history. For all the talk about morality,
France’s 1949 law on children’s books had ideological roots. It was
pushed by an odd alliance of Communists, Catholic conservatives and
jobless French cartoonists, determined that French children should be
reading works imbued with “national” values. Pascal Ory, a historian at
the Sorbonne university (author of “Mickey Go Home. The
de-Americanisation of the cartoon strip”), writes that the main aim of
the law—which, remarkably, remains in force today, tweaked in the 1950s
to add a ban on incitement of ethnic prejudice—was to block comics from
America.

The question
of the transatlantic gap remains current. The coming year is a big one
for Tintin. In 2009 it will be 80 years since the boy reporter embarked
on his first adventure, a trip to the Soviet Union. In Belgium a museum
is to open, dedicated to the work of Hergé, Tintin’s creator, whose
real name was Georges Remi. (His initials, when reversed, are
pronounced Hergé in French.) Even under construction, the museum is
impressive: a soaring structure of concrete and glass, wrapped around a
large wooden form like the hull of an upturned ship. The seriousness of
the architecture carries a message. This is not a theme park, but a
gallery for high art. That is an uncontroversial view in continental
Europe, especially in Belgium and France, where cartoon strips are
reviewed in critical essays and dissected in academic theses.

In America
filming is supposed to begin in earnest on a trilogy of Tintin films to
be directed by Steven Spielberg and Peter Jackson, using digital
“performance capture” technology to create a hybrid between animation
and live action. Mr Spielberg secured an option to film Tintin shortly
before Hergé’s death in 1983. The delays seem to have been caused
partly by American puzzlement at Tintin. In September 2008 Universal
Pictures pulled out of a plan to co-finance the project. The Hollywood Reporter,
a trade publication, describes the films as being about “a young
Belgian reporter and world traveller who is aided in his adventures by
his faithful dog Snowy”, and explains that this storyline is “hugely
popular in Europe”. You can almost hear the baffled shrugs.

Moulinsart-Studios Herge

As a
journalist, Tintin is spectacularly unproductive, even by the idle
standards of his trade. In all 24 albums he pauses perhaps twice to jot
down a note. He happily gives rival reporters the details of his latest
scoop. Only once is he seen with a completed article, on his inaugural
1929 trip to the Soviet Union. He briefly ponders how to get the
manuscript to his office, before yawning and heading for bed,
declaring: “Oh well, we’ll think about that tomorrow.” Four frames
later, secret policemen are climbing the stairs to arrest him, and the
article is never mentioned again.

Unlike
another fictional adolescent with a media job—the American comic
character Spiderman (portrayed as a freelance photographer in civilian
life)—Tintin is not an outsider, or a rebel against the established
order. He defends monarchs against revolutionaries (earning a
knighthood in one book). His first instinct on catching a villain is to
hand him over to the nearest police chief. He does not carry his own
gun, though he shoots like an ace. Though slight, he has a very
gentlemanly set of fighting skills: he knows how to box, how to sail,
to drive racing cars, pilot planes and ride horses. He has few chances
to rescue girls or women, moving in an almost entirely male, sexless
world, but is quick to defend small boys from unearned beatings. His
quick wits compensate for his lack of brawn. André Malraux, a French
writer and politician, claimed that General de Gaulle called Tintin his
“only international rival”, because both were famous for standing up to
bullies.

Tintin is
grandly uninterested in money. He is indifferent when—on occasion—he is
offered large sums for accounts of catching some villain. Hergé’s
disdain for transatlantic capitalism is portrayed in the 1931 “Tintin
in America”, in which businessmen bid each other up to offer Tintin
$100,000 for an oil well. When the young reporter explains the well is
on Blackfoot Indian land, the businessmen steal the land from the
Indians.

European
snobbery about money permeates the books. Villains are frequently showy
arrivistes. Old money is good. A gift (as opposed to gainful
employment) allows his best friend, Captain Haddock, to buy back his
family’s ancestral mansion. The captain takes to castle life with
relish. Enriched by a treasure find, he swaps his seaman’s uniform for
an increasingly Wodehousian wardrobe involving cravats, tweeds and at
one point a monocle.

Hergé did not
share his creation’s lack of interest in money. He paid minute
attention to marketing (in total, some 200m albums have been sold) and
the production of puzzles, colouring books and toys. Though Hergé is
routinely voted onto lists of “10 famous Belgians”, he had no illusions
about his homeland’s limitations as a market. He quickly began excising
references to Tintin’s Belgian roots to boost his appeal on the French
and Swiss markets, referring to him in 1935 as a “young European
reporter”. He was happy for English-language editions to leave the
impression that Tintin was British. Captain Haddock’s ancestral mansion
changed from the Chateau de Moulinsart into Marlinspike Hall, and his
most illustrious ancestor became a hero of the British royal navy,
rather than a commander in the fleet of Louis XIV.

Assuming that
Tintin does end up the subject of a Hollywood blockbuster, many around
the world will soon think he is American. Hergé’s heirs know Tintin’s
fame will take on quite different, global dimensions, in a way that
will be hard to control. That will mark a big change.

After Hergé’s
death, his wife Fanny inherited the rights to his work. She remains in
overall artistic control of the Hergé Studios in Brussels (day to day
the studios are run by Fanny’s second husband, Nick Rodwell, a British
businessman). The studios are known for the ferocity with which they
guard the works, scouring the world for abuses of copyright from
Hergé’s old offices on a smart shopping avenue.

Mrs Rodwell
confesses to seeing risks in Hollywood doing Tintin. To her, the charm
of Hergé’s work is absolutely “European”—more “nuanced” than an
American comic strip. The American style of telling a story threatens
that European “sensibility”, she suggests: American narratives are
“very dynamic, but more violent, and are much more aggressively paced.”

Hergé wanted
the risk taken. He died days before a planned face-to-face meeting with
Mr Spielberg, but had been briefed on the director’s thinking by a
trusted assistant, Alain Baran, sent to Los Angeles to open
negotiations. Mr Baran later wrote that Mr Spielberg saw Tintin as an
“Indiana Jones for kids”, imagining Jack Nicholson as Captain Haddock.
Such talk did not alarm Hergé. He said a film-maker like Mr Spielberg
should be given free rein, and told his wife: “This Tintin will
doubtless be different, but it will be a good Tintin.”

Such artistic
openness is perhaps surprising, given where Hergé began his career. He
always said the Catholic boy-scout movement rescued him from a “grey”
childhood in lower middle-class Brussels. From there, he fell in with a
slightly hysterical clutch of hard-right priests and nationalists, one
of whom gave him his first job, on a small Belgian Catholic newspaper,
the Vingtième Siècle, which fervently supported the monarchy,
Belgian missionaries in the Congo and Mussolini and loathed the
Bolshevik atheists running Russia and “Judeo-American” capitalism.

Tintin was born in this unpromising environment, in a weekly children’s supplement, Le Petit Vingtième.
Hergé wanted to draw cartoons about the Wild West of America. His
employer, an alarming priest named Norbert Wallez, had other ideas,
ordering that the new fictional reporter be sent to the Soviet Union,
then to Belgium’s colony in the Congo.

The 1930
story “Tintin in the Congo” has done much to feed Hergé’s reputation
for racism. Its Africans are crude caricatures: child-men with wide
eyes and bloated lips who prostrate themselves before Tintin (as well
as Snowy his dog), after he shows off such magic as an electromagnet,
or quinine pills for malaria.

Moulinsart-Studios Herge

In
Scandinavia the staggering toll of African wildlife Tintin
kills—especially a rhinoceros he reduces to blackened chunks with
dynamite—has prompted additional angst. The book remains popular in
Africa, Hergé defenders like to assert. But, in truth, it has lost any
charm it ever possessed. It is a work of propaganda—not for
“colonialism”, as is often said—but more narrowly for Belgian
missionaries, one of whom keeps saving Tintin’s life in evermore
ludicrous ways: first dispatching a half dozen crocodiles with a rifle
then rescuing him from a roaring waterfall, seemingly unhindered by his
advanced age and ankle-length soutane.

Hergé’s
reputation is also marked by charges of anti-Semitism. He received many
complaints about one of his villains, the hook-nosed New York
financier, “Mr Blumenstein”. It does not help that this caricature
appeared in “The Shooting Star”, an adventure written in 1941 while
living in Brussels under Nazi occupation. In the field of devout
Tintinologists, much effort has been put to explaining this “lapse”
away. Michael Farr, a British expert on Tintin, is typical, writing in
2001 that as soon as Hergé realised that his character was “liable to
misunderstanding”, he gave Blumenstein a different name and a new
nationality, having him hail from “São Rico”.

Tintinologists have a ready explanation too for another lapse: the fact that Hergé spent the war working for Le Soir,
a Belgian newspaper seized by the German occupiers and turned into a
propaganda organ. This is usually explained by Hergé’s “naivety”, as an
author of children’s comics (a defence also used for P.G. Wodehouse).

Alas, none of
those arguments survive a reading of a biography of Hergé by Philippe
Goddin, published in 2007. Mr Goddin’s honesty is commendable: his is
an official biography, based on Hergé’s large collection of private
papers.

Mr Goddin returns to “The Shooting Star”, and its initial newspaper serialisation in Le Soir.
This included a strip about the panic unleashed when it seemed a giant
meteorite would hit the earth. In one frame, he writes, Hergé drew two
Jews rejoicing that if the world ended, they would not have to pay back
their creditors. At that same moment in Belgium, Mr Goddin notes, Jews
were being ordered to move to the country’s largest cities and remove
their children from ordinary schools. They were also banned from owning
radios, and were subject to a curfew. In the news pages of Le Soir,
these measures were described as indispensable preparations for an
orderly “emigration” of Jews. A year later, Hergé deleted the drawing
of the Jews of his own accord, when the serialised “The Shooting Star”
became an album.

Mr Goddin
demolishes the excuse of naivety, thanks to papers found in Hergé’s
files. As early as October 1940, he records, Hergé received an
anonymous letter accusing him of luring Belgian children to read German
propaganda, by publishing Tintin in Le Soir’s youth supplement.
A few months later, Hergé had a bitter argument with an old friend,
Philippe Gérard. In a letter, Gérard demanded Hergé either endorse the
“odious propaganda” of Le Soir or make his disagreement with the German occupation known. Saying it was just “a job” would not do, his friend concluded.

By way of
reply, Hergé offered a defence of neutrality. “I am neither pro-German,
nor pro-British,” he wrote back. “As I can do absolutely nothing to
hasten the victory of either England or Germany, I watch, I observe and
I chew things over. Calmly and without passion.” His aim was to remain
an “honest man”, Hergé wrote, which did not mean shouting “Heil Hitler”
or volunteering for the Waffen SS. Some said German occupiers were
pillaging Belgium. An honest man had to acknowledge this was not true.

There is a
link between Hergé, this disappointing man, and his creation Tintin,
who fights against despots so bravely. It lies in the rationalisation
of impotence: a very European preoccupation.

The key to
Tintin is that he has the mindset of “someone born in a small country”,
says Charles Dierick, in-house historian at the Hergé Studios. He is
“the clever little guy who outsmarts big bullies”. And as a little guy,
even a clever one, Tintin’s bravery works within limits: he rescues
friends, and foils plots. But when he finds himself in
Japanese-controlled Shanghai, in “The Blue Lotus”, he can do nothing to
end the broader problem of foreign occupation.

Hergé’s final
complete adventure, the 1976 “Tintin and the Picaros”, offers the
clearest expression of this doctrine of neutrality. Tintin finds
himself summoned to rescue old friends from a civil war between two
Latin American warlords. One general is backed by “Borduria”, a
fictional but identifiably Communist-block nation. The other is
financed by the (presumably American) International Banana Company.
Tintin does not take political sides. He contents himself by backing
the rebel general in exchange for his friends’ freedom, and a pledge
that the revolution will be bloodless, with no executions or reprisals.
That focus on the death penalty is an extremely European way for Tintin
to remain a “man of good faith”, to borrow a phrase Hergé used about
himself. There is no wild talk of promoting democracy, or even regime
change.

Interviewed
late in life, Hergé acknowledged the links between his wartime
experiences and his moral outlook. The second world war lies behind a
great deal in Tintin, just as it lies deep beneath the political
instincts of many on the European continent. It matters a lot that the
Anglo-Saxon world has a different memory of that same war: it is a
tragic event, but not a cause for shame, nor a reminder of impotence.

Tintin has
never fallen foul of the 1949 French law on children’s literature. He
is not a coward, and the albums do not make that vice appear in a
favourable light. But he is a pragmatist, albeit a principled one.
Perhaps Anglo-Saxon audiences want something more from their fictional
heroes: they want them imbued with the power to change events, and
inflict total defeat on the wicked. Tintin cannot offer something so
unrealistic. In that, he is a very European hero.

MORE books about Abraham Lincoln line the shelves of libraries than
about any other American. Can there be anything new to say about our
16th president? Surprisingly, the answer is yes. Having previously
offered fresh insights into Lyndon Johnson,
the Kennedys and Franklin and Eleanor Roosevelt, Doris Kearns Goodwin
has written an elegant, incisive study of Lincoln and leading members
of his cabinet that will appeal to experts as well as to those whose
knowledge of Lincoln is an amalgam of high school history and popular
mythology.

Lincoln reading the Emancipation Proclamation to his cabinet in 1862,
from an engraving by Alexander Hay Ritchie after Francis Carpenter.

"Team of Rivals" (an apt but
uninspiring title) opens in May 1860 with four men awaiting news from
the national convention of the Republican Party in Chicago. Thousands
of supporters were gathered in Auburn, N.Y., where a cannon was primed
to fire a salute to the expected nomination of Senator William Henry
Seward for president. In Columbus, Ohio, Gov. Salmon P. Chase hoped
that if Seward faltered, the mantle would fall on his shoulders. In St.
Louis, 66-year-old Edward Bates, a judge who still called himself a
Whig, hoped the convention might turn to him as the only candidate who
could carry the conservative free states, whose electoral votes were
necessary for a Republican victory. In Springfield, Ill., a former
one-term congressman who had been twice defeated for election to the
Senate waited with resigned expectation that his long-shot candidacy
would be flattened by the Seward steamroller.

Although her
readers presumably know who won the nomination, Goodwin leaves them in
suspense for almost 250 pages as she chronicles the personal stories
and political careers of these four men. The unifying theme is the
growing sectional polarization over the issues of slavery and its
expansion. But each story follows a separate track until they begin to
converge with the death of the Whig Party and the birth of the
Republican Party in the mid-1850's.

Having served four years as
governor of New York and nearly 12 as a senator, Seward emerged as the
leader of the new party after 1856, when it fell just short of electing
a president on a platform of restricting the expansion of slavery. Next
to Seward in prominence was Chase, who had organized the Free Soil
Party in 1848, became its first senator in 1849 and represented the
cutting edge of the Republican antislavery ideology.

In contrast,
Lincoln's career languished in relative obscurity before 1858. In
Goodwin's telling, however, his story gradually and subtly takes
precedence. His famous debates with Stephen A. Douglas in 1858 gave him
national exposure, though Douglas won re-election to the Senate.
Lincoln's Cooper Union address in New York and his subsequent tour of
New England in early 1860 increased his visibility. Although some
newspapers still spelled his first name "Abram," Lincoln appealed to a
growing number of Republicans as the strongest potential nominee. Less
radical than Chase and more firmly antislavery than Bates, he seemed
the one most likely to carry the Lower Northern states of Pennsylvania,
Indiana and Illinois that the Republicans had lost in 1856, without
alienating the antislavery Northern tier states from New England to
Minnesota. Although Lincoln's "house divided" speech in 1858 was as
uncompromising as Seward's "irrepressible conflict" address that same
year, Seward, as well as Chase, had a more radical reputation than
Lincoln. But because they had been in public life much longer than
Lincoln, they had also made more enemies.

Having set the stage
for the nominating convention, Goodwin recounts the drama of Lincoln's
surprising first-ballot strength (102 votes to Seward's 173½, Chase's
49, and Bates's 48). On the second ballot Lincoln pulled almost even
with Seward, and amid rising excitement in a convention hall packed
with a leather-lunged home-state cheering section, he won a stunning
victory on the third ballot. All three of his shocked rivals believed
the better man had lost. Lincoln's subsequent election as president did
not change their minds.

The Republican victory without a single
electoral vote (and scarcely any popular votes) from the 15 slave
states provoked seven of them to secede and form the Confederate States
of America. In this crisis, Lincoln took the unparalleled step of
appointing to his cabinet all three of his rivals plus a fourth, Simon
Cameron, Pennsylvania's favorite son. Seward got the top spot as
secretary of state; Chase became secretary of the Treasury, Bates
attorney general and Cameron secretary of war. Could this "team of
rivals," each of them initially convinced of his superiority to the
inexperienced president, work together in harmony? Joseph Medill, the
editor of The Chicago Tribune and one of Lincoln's most loyal
supporters, later asked the president why he had made these
appointments. "We needed the strongest men of the party in the
cabinet," Lincoln replied. "These were the very strongest men. Then I
had no right to deprive the country of their services." They were
indeed strong men, Goodwin notes. "But in the end, it was the prairie
lawyer from Springfield who would emerge as the strongest of them all."

Seward at first shared the widespread assumption that he would
be the "premier" of the administration. During the tense weeks between
Lincoln's inauguration on March 4, 1861, and the eruption of war on
April 12, when Confederate guns fired on Fort Sumter, Seward
recommended that Lincoln withdraw the troops from Sumter and then
worked to undermine the president's determination to hold and resupply
the fort. This tug of war climaxed with Seward's notorious memorandum
to Lincoln complaining that the administration was "without a policy
either domestic or foreign." Seward proposed to abandon Fort Sumter
while reinforcing Fort Pickens (at Pensacola) to preserve "the
symbolism of federal authority." Seward also suggested an ultimatum to
provoke war with Spain or France over their violations of the Monroe
Doctrine as a way to reunite the country. "Whatever policy we adopt,"
Seward declared, "either the President must do it himself . . . or
devolve it on some member of his Cabinet. . . . I neither seek to evade
nor assume responsibility."

Such a bald-faced challenge would
have justified Seward's dismissal. But Lincoln did not want to worsen
the crisis by breaking up his administration after less than a month in
office. So he responded in a manner that would become his hallmark in
dealing with recalcitrant but important subordinates, generals or
senators: a firm assertion of his own policy and responsibility for it,
done in such a way as to avoid a personal rebuff that might create an
enemy. Lincoln wrote a response to Seward that reiterated his intention
to resupply Sumter, ignored the suggestion of an ultimatum to Spain or
France and insisted that whatever policy was decided on, "I must do
it." Thinking that this written response might be too cold, Lincoln did
not send it but instead spoke personally with Seward.

Several
weeks later Lincoln again overruled Seward by softening the tone of
what Goodwin accurately describes as a "surly" and "abrasive" dispatch
warning Britain against recognition of the Confederacy. By this time
Seward had begun to see the light. "It is due to the president to say,
that his magnanimity is almost superhuman," he wrote. "The president is
the best of us."

Lincoln grew closer to Seward than to any
other member of his administration. They spent many relaxing hours
together (Seward lived a block from the White House) swapping political
anecdotes and other stories, and Seward became one of the president's
most loyal and effective supporters. He frequently praised Lincoln
publicly as "the best and wisest man he [had] ever known."

Attorney
General Bates, who initially underestimated Lincoln, soon echoed
Seward's favorable opinions. Not so Chase, who never quite got over his
conviction that the wrong man was nominated in 1860 and that he should
receive the nomination in 1864. Lincoln valued his Treasury secretary's
abilities as a finance minister, but he recognized Chase's lack of
loyalty and poorly concealed ambition to replace him. Chase also became
a lightning rod for the radical Republicans' dissatisfaction with the
pace of Lincoln's actions against slavery.

On several occasions
Chase offered his resignation in a calculated effort to force Lincoln's
hand on a policy or patronage dispute. Each time Lincoln parried
Chase's tactic, refusing to accept his resignation, reasserting his own
authority and maintaining the balance among radicals, moderates and
conservatives in the administration. When Chase tried this ploy a
fourth time in June 1864, after Lincoln had been safely renominated,
the president astonished him by accepting the resignation. To redress
the cabinet balance, Lincoln subsequently requested the resignation of
Postmaster General Montgomery Blair, Chase's most bitter enemy in the
cabinet and a member of the powerful Blair family, which represented
the most conservative element in the party. And Lincoln further defused
radical opposition by appointing the deposed Chase as chief justice of
the United States.

AS these internal Republican feuds suggest,
the party in the 1860's was a coalition of politicians who only a few
years earlier had been Whigs (Lincoln, Seward, Bates), Democrats
(Blair, Secretary of the Navy Gideon Welles and Vice President Hannibal
Hamlin), Free Soilers (Chase), or had flirted with the short-lived
anti-immigrant American Party, or Know Nothings (Cameron and Bates). In
addition, several cabinet members personally disliked each other: Blair
and Chase, Seward and Welles, Chase and Seward, Blair and Secretary of
War Edwin M. Stanton, who replaced Cameron in January 1862. Lincoln's
"political genius" enabled him to herd these political cats and keep
them driving toward ultimate victory.

How did he do it? Goodwin
deals with this question better than any other writer. Part of the
answer lay in Lincoln's steadfastness of purpose, which inspired
subordinates to overcome their petty rivalries. Part of it lay in his
superb sense of timing and his sensitivity to the pulse of public
opinion as he moved to bring along a divided people to the support of
"a new birth of freedom." And part of it lay in Lincoln's ability to
rise above personal slights, his talent for getting along with men of
clashing ideologies and personalities who could not get along with each
other.

This temperament was best illustrated by Lincoln's
relationship with Stanton, which Goodwin analyzes with great insight.
In 1855 Lincoln had been retained as one of the attorneys for the
defense in a patent-infringement suit brought by the McCormick reaper
company. Because the case was initially scheduled to be tried in
Chicago, the defense team needed an Illinois lawyer. But when the trial
was moved to Cincinnati, the defense retained Stanton, one of the
country's foremost attorneys, without bothering to inform Lincoln. When
he arrived in Cincinnati after careful preparation, Stanton and his
colleagues ignored him; Stanton was even heard to speak contemptuously
of Lincoln as a backwoods bumpkin. Lincoln was hurt by the snub but
stayed to watch the trial and was impressed by Stanton's courtroom
brilliance. Six years later Stanton, a Democrat, was practicing in
Washington during the war's first year and referred disdainfully to
Lincoln in conversations with friends. Lincoln was aware of Stanton's
opinions, but when he decided to get rid of the incompetent Cameron,
who had made a hash of military mobilization, he appointed none other
than Stanton as secretary of war.

Stanton soon justified the
appointment. He worked 15-hour days at his stand-up desk and proved to
be one of the best war secretaries the country has ever had. And like
Seward, he soon changed his opinion of Lincoln, forging a close
relationship with the president second only to Seward's. "No men were
ever so deceived as we at Cincinnati," Stanton confessed to his former
associate on the reaper case. No one was more grief-stricken by
Lincoln's assassination than Stanton, who spoke the imperishable words
as the president breathed his last: "Now he belongs to the ages."
Lincoln's private secretary and confidant John Hay subsequently wrote
to Stanton: "Not everyone knows, as I do, how close you stood to our
lost leader, how he loved you and trusted you, and how vain were all
the efforts to shake that trust and confidence."

"Team of Rivals"
invites comparison with Goodwin's prize-winning account of another
wartime president and his associates, "No Ordinary Time." Both portray
the extraordinary leadership qualities of the commanders in chief in
America's biggest wars. But "No Ordinary Time" is really a book about
two leaders, Eleanor as well as Franklin Roosevelt,
and about their complicated personal as well as official relationships
with the women and men who were close to them. The only women
conspicuous in "Team of Rivals" are Mary Lincoln and Salmon Chase's
beautiful daughter Kate, who rivaled Mary Lincoln for status in
Washington social circles. But they appear only occasionally and are
not essential to the story. Goodwin depicts the sometimes splenetic
Mary Lincoln with more sympathy than many historians have done, but
cannot turn her into an Eleanor Roosevelt.

"Team of Rivals" is
about men, not men and women. It does not range over the home front of
factories and farms in the manner of "No Ordinary Time." It focuses on
Washington and on the men who ran the war, chiefly Lincoln, Seward,
Chase and Stanton. Within that sphere Goodwin has brilliantly described
how Lincoln forged a team that preserved a nation and freed America
from the curse of slavery.

James
M. McPherson is emeritus professor of history at Princeton University
and the author of several books on Lincoln and on the Civil War,
including "Battle Cry of Freedom."

When managers say suit yourself

When a case was made for Chubb employees to choose the hours that suit them, John Finnegan, chief executive of the US insurance group, was unconvinced.

“To
be honest, I initially viewed the reported benefits of flexible work
hours with some scepticism,” he says. “As most CEOs would, I saw it as
an employee accommodation programme with a cost. I didn’t know you
could at the same time maintain or increase productivity.”

He was
persuaded to back a trial of a programme devised by the Bold
Initiative, a New York non-profit organisation, because it incorporated
targets for improving performance and held teams and their managers
accountable for achieving these.

The results convinced him the
approach could work even in tough times, because of its positive impact
on productivity and employee engagement. Under the programme, managers
set the parameters and approve the work plan, but team members
collectively determine “leaner” ways of working that accommodate
individual flexibility.

The impact of flexible working in a
downturn is the subject of fierce debate. When the UK government
announced this month it would press on with extending the right to
request flexible working to parents of children up to 16, some business
lobbies protested that the measure would impose additional costs. The
EEF manufacturers’ body called it “a bad message to business”. A
government official countered that the benefits outweighed the costs
and would help the economy through recession.

Since its first
pilot with 17 people in 2004, Chubb has brought 400 of its 10,000
workforce into the programme and now plans to extend it further.

“It’s
a business initiative first and foremost,” says Rolando Orama (pictured
left), a senior vice-president who heads Chubb’s Chicago operation,
handling claims across the Midwest. Of his team of 163 people, 120 work
non-standard schedules. The others stick to a regular 8am-5pm routine
by choice.

One team member starts at 6am and finishes at 2.30pm
so she can complete her college studies. Another spends Fridays in
summer working from his boat on Lake Michigan, using a laptop, mobile
phone and instant messaging. A third has cut eight hours of commuting
by working at home twice a week, which gives him more time for his
young family and essentials such as doctors’ appointments.

Everyone’s
schedule is available to view on a shared calendar, so the team knows
whom to call in an emergency. The programme is suspended for business
presentations that everyone must attend and during holiday peaks.

Mr
Orama, who works a day a week from home, reels off a list of
improvements in the team’s productivity: an increase from 82 per cent
to 91 per cent in customers contacted within 24 hours; a jump from 90
per cent to 100 per cent in timely benefit payments to claimants; and
business cover extended by three hours a day thanks to some employees
starting earlier and others finishing later.

Team members have
also become more adaptable to change – useful in today’s economic
turbulence – and more willing to act on their own initiative. “If
there’s an unexpected absence, they jump in,” he says.

In the US,
Barack Obama, the president-elect, has spoken positively about
flexibility. The Washington Post last month cited a letter he wrote to
Department of Labor employees, saying: “I believe that it’s time we
stopped talking about family values and start pursuing policies that
truly value families, such as paid family leave, flexible work
schedules and telework, with the federal government leading by
example.”

Appraisals prove that system measures up on productivity

What
is the payback from flexible working? Benefits such as retention of key
staff, reduced absenteeism and increased loyalty have long been
associated with flexible working. Now its potential for improving
productivity is becoming clearer as evaluations are made available.

●
The Bold programme sets measurable goals for teams introducing flexible
schedules. Chubb, the insurance group, has seen teams improve
productivity by 5 per cent. It has also recorded higher employee
engagement.

● A big majority of
flexible workers, and their managers and colleagues, in seven large
companies surveyed by Cranfield School of Management reported that
flexible work had either a positive impact on individual performance or
none at all.

● BT, the UK
telecommunications group, says its 14,500 homeworkers are 20 per cent
more efficient than their office-based peers. Flexible and remote
working practices have reduced its annual office running costs by £500m.

●As
a Hay Group survey finds companies still concerned about keeping
skills, experts say flexible work is an effective retention tool in a
downturn. “Leading companies are seeing flexibility as one way they can
keep talented employees,” says Ellen Galinsky, president of the US
Families and Work Institute. “Flexibility has to work for employer and
employee, and there have to be metrics to show this.”

Paul
Volcker, former chairman of the US Federal Reserve and head of Mr
Obama’s economic recovery advisory board, is also a board director of
the Bold organisation. Bea Fitzpatrick, Bold’s chief executive,
believes its emphasis on business benefits, as well as individual
employees’ needs, makes it a tool for the downturn. “We’re finding the
more constrained companies are financially, the more interested they
are in spreading this approach,” she says.

Employees have come up with more efficient ways of working at the headquarters of Costco,
says John Matthews, head of human resources at the warehouse club
chain. Traditionally, for example, people in the accounting department
worked overtime during peak periods and were underemployed at slacker
times. “When we turned the issue over to our employees, they designed a
schedule to eliminate all overtime, speed up the [book] closing process
and maintain the high level of accuracy in the reports,” he says.

Productivity
has improved, and overtime has fallen by 42 per cent year on year.
About 10 per cent of the 3,000 staff at the Seattle HQ are enlisted in
a Bold programme, and more will join them next year. “People generally
appreciate us listening to them and not wasting their time,” Mr
Matthews says.

Flexible schedules offer another business benefit
in difficult economic times, according to Patty Dudek, vice-president
of IBM’s WebSphere development, which develops software for customers’
e-business applications. The company recently introduced
round-the-clock software development, with work passing between 1,000
developers in different time zones. The global team can update a
product in four to six months, versus 18-24 months five years ago.

Rather
like the Bold initiative, IBM’s approach combines a focus on
productivity with individual flexibility. Many developers split their
working day into chunks around their personal duties and this makes the
team more responsive, Ms Dudek says.

“Customers need something
different than they said they needed three months ago, and they need it
in days to respond to new business priorities,” she says. “If we did
not support flexibility, I’d be so constrained by how quickly I could
react.”

As a senior executive, she also works a flexible schedule
and believes it is a way of retaining and motivating good people. “If
we want top talent to work on something and we give them all the
flexibility they need to balance their lives, they’re then more willing
and able to step up to the challenge when we need them to drop
everything.”

At Chubb, Mr Finnegan does not easily envisage
flexibility applying to top executives such as himself, on the grounds
that “it’s tough to measure what I do every day in terms of output”.

But
he is convinced of the advantages of a performance-driven approach. He
likens it to the way Toyota gained competitive advantage in the global
motor industry in the 1980s with its “lean” manufacturing methods.

“It’s
making people more responsible and accountable for what they do, like
the Toyota breakthrough in the way cars are made,” he says. “The test
is that they can do it better than they’ve done it before.”

December 23, 2008

Expect to get dirty when a name is mud

In
England at around the time of Edward the Confessor people started to
call themselves after the sort of work they did. If you made bread you
were Mr Baker; if you made things from wood you took the name Mr
Carpenter; if you made barrels you were called Mr Cooper.

I was reminded of this fine tradition last week by the story of Bernie Madoff
(pronounced Made-off). If one’s occupation involves making off with
$50bn of investors’ money, then it is quite proper that one’s name
should reflect that.

Mr Madoff is not alone among disgraced
businessmen in having a name that gives the game away. Take the case of
Anurag Dikshit, co-founder of PartyGaming, who last week agreed to plead guilty
to an internet betting charge. Think too of the Illinois governor, Rod
Blagojevich, accused of trying to sell Barack Obama’s Senate seat. His
name suggests that blagging is something that came naturally to him.

Could
there be a trend here? Last week I spent a day researching financiers
and business people that had got into trouble and decided there
definitely could. According to my findings, what unites them is not a
troubled childhood, alcohol abuse or a narcissistic personality
disorder but having a name that hints at trouble.

Writers of
fiction understand this well. Charles Dickens appreciated the
importance of people living up to their names, and so called his
goodies Little Nell or Florence or Amy, while he gave his baddies names
such as Ebenezer Scrooge and Uriah Heep. Even less subtly in The Wonderful Wizard of Oz L. Frank Baum calls his villains The Wicked Witch of the West and The Wicked Witch of the East.

Real life turns out to be closer to Wizard of Oz than
A Christmas Carol in the prosaic way it links dark deeds and
dark names. Consider Conrad Black, who is now serving out a prison
sentence in Florida. It is no coincidence that it wasn’t Conrad White
or Conrad Scarlett who defrauded Hollinger shareholders out of millions
of dollars.

At Enron the names should also have been a clue to
hapless investors and staff that something was amiss. There was Kenneth
Lay, whose moniker should have warned any innocents that climbing into
bed with him was going to be a mistake. And then there was Andrew
Fastow, who pulled a fast-o with his off-balance sheet deals and is now
behind bars. And Jeffrey Skilling – whose name was surely a double
bluff. Skill was something he had plenty of, he just happened not to
put it to terribly good use.

In the more distant past there was
Michael Milken who, as Junk Bond King, milked ’em for all they were
worth. And Asil Nadir, now a fugitive from justice in Cyprus, whose
fraudulent antics at Polly Peck represented a nadir for shareholders,
the Serious Fraud Office, a government minister who resigned and the
entire British political establishment.

Some business crooks
signalled their badness more through their first names than their
surnames: Dennis Kozlowski, greedy bully at Tyco who blew $15,000 of
shareholders’ money on an umbrella stand and $8,000 on a shower
curtain, shared a first name with the British cartoon character Dennis
the Menace who used to go around bashing up softies until his dad
attacked him with a slipper.

Aha, you may be thinking, this is
all very well, but what about Robert Maxwell? He was utterly crooked,
but his name was utterly straight. At first sight, my theory does
appear to collapse with the crooked Czech. However, Robert Maxwell was
not born Robert Maxwell; his real name was Jan Ludvig Hoch – which is
an entirely appropriate name for one who became so deeply in hock not
only to his bankers but to thousands of luckless Maxwell pensioners.

Though
this link between name and misdemeanour is irrefutable, it does not
tell us which way the causality runs. Is it that babies with wicked
genes are somehow a magnet for wicked names?

Or is that sweet
children, born innocent, are somehow turned bad by the names they are
given? If you have to tell people over and again that your name is
Made-Off, or Dikshit, maybe you start getting ideas and behaving
accordingly.

Either way, my research has important implications
for all investors and fine upstanding citizens. If, say, a nice looking
Dutch financier should ever come along promising you that his fund will
reliably pay out 15 per cent, look first at his name. If, let us say,
it is Hans In Der Til, then just say no.

.......................

This
year I have only received one corporate Christmas card, and as I had
never heard of the company it was from nor the 12 different people who
signed it, it didn’t lift my spirits much. I’ve also received fewer
e-cards than last year, which is no great loss either – as they cost no
effort to send, they give no joy to receive. However, one e-card has
given me a great deal of pleasure and I would like you to enjoy it too.
It is from the Frankfurt school of Finance and Management and is a
video of the faculty and support staff swaying as they sing tunelessly
“We Wish You a Merry Christmas” in broken English. I could not
recommend it more highly: www.frankfurt-school.de/content/de/xmas.

In the meantime, I would like to wish you a merry Christmas too, only my wishes come unsung, non-electronic and on pink paper.

December 21, 2008

No questions asked

Looking
down on a sunlit Manhattan skyline from the seaplane carrying him to
work, Bernard Madoff must have felt on top of the world.

In the
late 1980s, when his morning routine involved a short hop from Long
Island to the East River, a stone’s throw from his office in New York’s
financial district, Mr Madoff was just another successful Wall Street
operator.

A prominent member of the securities industry with deep
ties to the wealthy Jewish community that divides its time between New
York and Florida, Mr Madoff had an otherwise fairly ordinary lifestyle
and could have been forgiven the extravagant touch of an aerial commute.

But
after last week, when US prosecutors say he confessed to what could be
the largest fraud ever perpetrated, nothing will ever be ordinary again
for the 70-year-old Mr Madoff.

There will be no more seaplanes
after a court ordered Mr Madoff to submit to electronic monitoring and
remain in his Manhattan duplex daily from 7pm to 9am. Gone, too, is the
adulation of the rich investors who used to beg “Bernie” to take their
money – replaced by the shock and pain of huge financial losses and
betrayal of trust.

As details begin to emerge of a “Ponzi scheme”
that is alleged to have swindled up to $50bn (£33bn, €36bn) from
investors ranging from HSBC, the giant UK bank, to the charity of
Steven Spielberg, the film director, one central question remains
unanswered. How could Bernie have duped so many investors for so long?

Those
who met Mr Madoff during a career that began in 1960, when he founded
his securities firm with $5,000 earned installing garden sprinklers and
patrolling Long Island beaches, talk of a private, self-effacing man.
“The last thing Bernie Madoff wanted was publicity,” says one of his
fellow travellers on the East River seaplane.

Affable and polite
but not overly talkative, Mr Madoff was active on the social and
charity scenes in Manhattan and Palm Beach – the Florida town that
serves as an escape hatch for rich New Yorkers.

Wrapped up: Bernard Madoff returns to his New York apartment on Tuesday after a court imposed a curfew

Yet
despite his wealth – he owns a yacht and houses in Palm Beach and Cap
d’Antibes in France as well as his Upper East Side apartment – Mr
Madoff did not stand out from the crowd of well-off middle-aged people
with whom he socialised. “He was low-key,” recalls Charles Gradante, a
hedge fund adviser who met him regularly on the Palm Beach social
circuit. “When I saw him at cocktail parties, he would be in the corner
and investors would sometimes go over to him. He didn’t have a
charismatic presence; he wasn’t exuding confidence.”

Senio
Figliozzi, owner of the Ever­glades Barber Shop in Palm Beach, cut his
hair and gave him facials, manicures and pedicures for 17 years but
rarely heard him talk about business. He describes Mr Madoff as a “very
nice man who was always polite and gentlemanly” and tipped the standard
20 per cent.

But behind that everyman persona, Mr Madoff weaved a
complex web of connections that lured more and more investors into his
fold. Ponzi schemes – pyramid arrangements named after the Italian
immigrant to the US who first attempted the scam in the 1920s – are
relatively unsophisticated frauds in which the organisers repay old
investors not with genuine gains but with funds from new investors.
Investigators allege that Mr Madoff’s was in operation from at least
2005.

If he did indeed craft one, there were no outward signs
when, more than a decade ago, Mr Madoff added an investment firm to his
brokerage house and later moved to the tall, thin midtown skyscraper
known as the Lipstick Building. With a reputation as a leading
market-maker – the middle-man between buyers and sellers – on Nasdaq,
the stock market he chaired for a few years, Mr Madoff was not unusual
in moving from broking to investing.

Nor did it seem strange
that, as a self-made man of a certain standing in the Jewish community,
Mr Madoff’s should tap his friends and acquaintances in New York
society and Palm Beach’s exclusive Country Club.

To be sure, Mr
Madoff did not move in the top circles of American social life – the
parties dominated by film celebrities, tycoons such as Donald Trump or
super-rich donors such as Sandy Weill, the former Citigroup chief. His
was a more intimate, less flashy group, according to David Patrick
Columbia, the editor of NewYorkSocialDiary.com – a tightly-knit
community centred on Upper East Side synagogues and charitable
organisations.

Many of these pious, often elderly, people looked
to increase their retirement nest-eggs without taking too many risks
and thought they had found the holy grail in Mr Madoff’s enviable
record: he consistently beat other fund managers and the market, year
after year.

“This is a community of affluent Jewish people who
basically socialise with each other. They are very philan­thropic and
all support each other’s charities,” Mr Columbia says. “Even though Mr
Madoff was not a top member of this community, his business made him
the man to know. He became an icon of financial success for them.”

But
after a few years, word of Mr Madoff’s ability to generate steady
returns, by employing a seemingly simple strategy of buying shares in
large companies and selling options on the same names to mitigate risk,
began spreading beyond his inner circle. Yet as more and more people
wanted in on Mr Madoff’s outstandingly consistent performance, he
played it cool. “He never pushed investing with him: he would turn
people away sometimes or tell them, ‘it is not for you’, recalls Mr
Gradante. “That all added to the mystique and made people want to get
in.”

Barbara Rosenthal, a Palm Beach property agent, says Mr
Madoff’s standing was such that people felt “you had to be lucky for
him to talk to you”, while another resident recalls that many people
joined the Country Club “so they could meet this guy”. Experts on
“affinity frauds” say the strong demand for Mr Madoff’s services – and
the fact that many investors were coming in through “friends” – had a
crucial consequence: those who did get in felt they had a special deal
and were less inclined to ask questions.

But as the friends and
family network became inadequate to satisfy investors’ craving for a
piece of Mr Madoff’s miraculous returns, an informal marketing system
began to take shape. In Palm Beach, one of the main middlemen for Mr
Madoff’s business was Robert Jaffe, according to several investors.
Dapper and well-spoken, Mr Jaffe got a number of individuals and
charities to place their money with Bernard Madoff Investment
Securities.

Mr Jaffe is the son-in-law of Carl Shapiro, founder
of the Kay Windsor clothing company and a renowned Boston
philanthropist. Mr Shapiro’s foundation is believed to have lost nearly
half of its $345m in assets and both he and his family are thought to
have suffered significant losses as a result of the collapse of Mr
Madoff’s firm.

There is no suggestion that either Mr Jaffe or any
members of his family knew about Mr Madoff’s alleged fraud. A
spokeswoman for Mr Jaffe did not return calls.

As the years went
by without any sign of a dip in performance, the tentacles of Mr
Madoff’s operations began stretching beyond Palm Beach’s manicured
lawns and Manhattan’s skyscrapers. The long list of potential victims
of his alleged actions includes Swiss and Austrian private banks, hedge
funds owned by large insurance companies such as MassMutual’s Tremont Capital Management, as well as famous names such as Fred Wilpon, owner of the New York Mets baseball team.

Other
high-profile investors, such as Mr Spielberg’s Wunderkinder foundation
and several charitable organisations that now face ruin, went in
through the more traditional route of their long-standing financial
advisers.

Some of the funds that fed international money into
Mr Madoff’s operation were run by well-known financiers such as Walter
Noel, the founder of Fairfield Greenwich Group. A Harvard-educated
former banker, Mr Noel had the ability to reach investors around the
globe, partly thanks to the help of Andres Piedrahita, a well-connected
banker who is Mr Noel’s son-in-law and runs Europe and Latin America
for Fairfield.

Fairfield, which is the largest potential victim
of Mr Madoff’s alleged fraud with some $7.5bn invested in his firm,
declined to comment.

Ascot Partners, a hedge fund run by Ezra
Merkin, also chairman of GMAC, General Motors’ former finance arm now
owned by Cerberus, the private equity group, was also an active
recruiter of funds for Mr Madoff’s enterprise. Ascot and Mr Merkin
could not be reached.

The “feeder funds”, whose returns were augmented by billions of dollars in loans from banks such as HSBC and Royal Bank of Scotland,
had a powerful incentive to persuade investors to place money with Mr
Madoff: lucrative returns. He forwent the standard 20 per cent cut on
profits demanded by most fund managers and, by and large, charged
feeder funds only commissions on trades.

Crucially, not many of
the investors appear to have challenged that unusual structure, let
alone Mr Madoff’s suspiciously good returns over the years.

Those
who did were less than impressed with Mr Madoff’s answers. Jim Hedges,
an asset manager, said that when they met in the late 1990s, Mr Madoff
was unable to explain his winning strategy. “He made little
conversation – he looked interested in ending the meeting as soon as
possible,” says Mr Hedges, who decided against investing.

Another
hedge fund expert recalls that he once approached Mr Madoff at a party
and quipped that his performance was too good to be true. Mr Madoff
chuckled and replied: “A lot of people say that.”

Now, as
investors contemplate the ruins of the financial edifice he built, the
tragedy is that among that “lot of people”, so few paused to ask
themselves why.

Additional reporting by Julie Macintosh in Palm Beach and Saskia Scholtes in New York

Dead wait

Ships at anchor off Singapore: consumers in the west are buying far fewer manufactured goods

Anyone
looking out from the restaurants and offices of Singapore's
tree-fringed south shore in the last few years has had a grandstand
view of globalisation in action. Scores of ships would be either
anchored offshore or passing by in one of the world's busiest shipping
lanes. Among the commonest sights have been huge container ships either
taking vast quantities of manufactured goods from Asia towards Europe
or, largely empty, heading back for more.

The view has started to
change in the last few months. As well as the gainfully employed ships,
there are now substantial numbers laid up, waiting for the end of a
sudden and deep collapse in their earning power.

First came the
dry bulk carriers that shift iron ore and coal around the world. Now,
container ships are beginning to appear among them, mothballed by
operators who have seen demand growth either slow down or go into
reverse. Consumers in western Europe and North America are buying far
fewer of the toys, computers, furniture and other manufactured goods
that go inside the stackable steel boxes they carry.

"It seems to
be going faster and deeper than expected," Michel Deleuran, a senior
executive in Denmark's Maersk Line, the sector's biggest operator, says
of the downturn.

Container trade between Asia and Europe, which
rose 16.5 per cent last year, is shrinking for the first time in
history, according to some estimates. The spot rate for moving a
40-foot container from Hong Kong to Rotterdam plummeted from about
$2,700 (£1,750, €1,900) in autumn last year to as low as $200 now.

Such figures
represent a severe shock for an industry that has grown used to the
double-digit annual volume growth and buoyant freight rates it has
enjoyed for nearly all the seven years since China joined the World
Trade Organisation.

The sector has not only been ideally placed
to benefit from globalisation but arguably caused it. The introduction
of the container in the 1960s and 1970s slashed the costs of
transporting goods compared with the general cargo ships they
superseded and encouraged manufacturers to move further away from their
markets.

For
retailers, manufacturers and other shippers who are container lines'
customers, the rate slump continues the long-term trend under way since
the first container ship set sail in 1956. Many will now be able to
send cargo the thousands of miles between Asia and Europe or North
America for a fraction of the trucking or rail costs of moving it a few
hundred miles on land.

But the trade-off is likely to be poorer
service, according to John Fossey, editor of Containerisation
International, a trade journal. On most routes, container lines or
alliances of lines run a "string" of ships – traditionally eight for
the round-trip from China to northern Europe and back – a week apart on
a circular route.

Lines and alliances are now cutting services, merging different
strings and slowing ships down to reduce fuel costs and ensure that
ships run full. That often requires the use of an extra vessel to
maintain a weekly service – Asia-Europe round-trips now typically take
63 days and require nine ships, against 56 days and eight ships before.

"Shippers,
who have benefited enormously in recent years from carriers offering
them multiple weekly sailings from a wide variety of ports, are
probably going to suffer from fewer sailings per week," Mr Fossey says.
"They probably will find themselves having access to fewer port calls
and probably have to face longer journey times as the liner companies
are slowing their vessels down."

Many of the aggressively growing
European companies that have come to dominate container shipping in the
last five years look set for years of struggling to meet the cost of
ambitious fleet expansion plans. The mainly German funds that own large
parts of such lines' fleets could face still tougher times as shipping
lines terminate charters and struggle to finance what Nick Sjoberg of
Braemar Shipping Services, a London shipbroker, calls a "feeding
frenzy" of ship orders.

"The person who ordered the ships has a
problem," he says. "He has to raise the equity and nobody wants to
finance him. That has the potential to create significant problems for
banks and for investors."

At the heart of the industry's problems
is the coincidence of the demand slowdown with the start of a wave of
deliveries of mammoth ships ordered at the height of excitement over
China's manufacturing boom.

The largest container ships now –
nearly 400m long, 55m wide and able to carry 13,000 containers – have
about one and a half times the capacity of the biggest of barely five
years ago. They have been designed mainly to handle exports from China
and other Asian countries to Europe, although some could be used on
services between Asia and the US west coast.

Mr Sjoberg says
shipowners need to raise $500bn to pay for ship purchases to which they
have committed. For the lines with the largest fleet order books, that
promises to be an onerous burden.

Bigger vessels, when full, can
transport each container more cheaply. But many see the giant ships
proving a liability in the downturn. Container ships, unlike tankers or
dry bulk ships, operate to fixed schedules, like a bus, train or
airline service. Like nearly all businesses, they need to attract
enough customers to cover fixed operating costs before making a profit.
Larger ships can make filling the available space harder and force
operators to offer deeper discounts.

Mark Page, research director
at the London-based Drewry Shipping Consultants says the arrival of big
new vessels on the Asia-Europe services of CMA CGM, the
Marseilles-based world number three line, helped to push down rates on
the whole route. "In a falling market, the last thing anybody wanted
was some really cargo-hungry new ship on the berth every week, needing
to be filled," he says.

CMA CGM, along with some other believers
in big ships, counters that the new vessels are part of the answer for
the industry, not the problem. Nicolas Sartini, in charge of its
Asia-Europe trades, says CMA CGM benefits from its worldwide network,
parts of which – such as Asia-west Africa trade – are still growing. It
is counteracting the slowdown in Asia-Europe volumes by topping up with
cargo bound for west Africa, which is discharged at Tangiers for
delivery by a second vessel.

Even if future vessel orders cannot be cancelled, lines will
seek to postpone deliveries, to avoid the depressing effect on rates of
a glut of new capacity. Many will also be able to dispose of ships
chartered from specialist owning companies to cut their costs and fleet
size. CMA CGM has the option to hand 150 of the 385 vessels it
currently operates back to their owners during 2009, according to Mr
Sartini.

Still, the slowdown is likely to shift the industry's balance of power eastwards. Asian operators such as Singapore's Neptune Orient Lines
and Hong Kong's Orient Overseas Container Lines, whose smaller ships
until recently looked a liability, now appear better placed than
others. They largely held back from placing big orders in recent years.

AXS
Marine, a Paris shipbroker, predicts that world container fleet
capacity will grow by more than 14 per cent a year on average between
this year and the start of 2011. Even corrected for the effects of
slower speeds and ship scrapping, Drewry expects vessel capacity to
grow by about 12 per cent this year and next – well above any
predictions of traffic growth.

In fact, it is possible to argue
the problems may be only just beginning. Preliminary figures from
Drewry's annual report on the sector, to be published next week,
suggest shipping lines' rates have still been rising this year by 4.1
per cent. For next year, they predict a fall in average rates of nearly
20 per cent.

That could leave shipping lines facing still more
unpalatable choices. The container ships laid up off Singapore are
mostly older, smaller workhorses that lines are taking out of service
to concentrate on filling their latest craft. If the downturn continues
much longer, Braemar's Mr Sjoberg suggests, they may instead need to
send gleaming-hulled new vessels each costing $170m straight to the
parking bay.

HAMBURG PORT: 'IT HAS ALWAYS BEEN A CYCLICAL INDUSTRY BUT THE SPEED OF THE SLUMP IS VERY DRAMATIC'

Every
ship that enters the port of Hamburg must pass the expansive window of
Hermann Ebel's modern office on the banks of the river Elbe, writes Chris Bryant.

This commanding view of one of Europe's biggest container
terminals puts the owner of Hansa Treuhand in a good position to
discuss how the financial crisis has affected German shipping. "It has
always been a cyclical industry but we've experienced an economic slump
in just three months. The speed is very dramatic," says Mr Ebel, whose
shipping finance company controls a 70-strong fleet of mainly container
vessels.

'Respite': repairs on the go in Hamburg

As
liquidity has dried up and trust evaporated, banks have refused to
write the letters of credit vital to the shipping of bulk goods. Some
container ships have been forced to carry lighter loads while bulk
cargo piles up in ports around the world, particularly in east Asia.

As
one of the world's most important shipping nations, Germany is
particularly vulnerable to these problems. German companies own 36 per
cent of the world's container ship capacity, while the country's banks
are responsible for about 40 per cent of global shipping finance. This
latter activity has ground to a halt as demand for new vessels slumps
and German lenders grapple with the turmoil in financial markets.

HSH
Nordbank, the world's largest shipping lender, was forced to seek up to
€30bn ($41bn, £27bn) in loan guarantees from the government's banking
rescue fund and is set to slim its balance sheet as part of a
restructuring. Several other Landesbanken – regionally owned public
lenders – are also heavily involved in shipping finance and lending
could contract further.
"I am not sure how much shipping finance will be available next year,"
says Christian Hennig, head of shipping credit at MM Warburg, a
Hamburg-based private bank.

Germany's
strength in container shipping is due in part to an innovative funding
model known as KG finance, which spreads the costs of shipbuilding by
giving private investors tax incentives to buy equity stakes in such
projects. German shipping KG funds last year attracted about $5.6bn of
equity, according to Clarkson Research Services, a maritime database
company.

Yet this model has come under pressure as anxious
investors hoard cash and demand for shipping charters falls, forcing
some companies to lay up vessels. For those shipowners able to renew
their charters, lower rates are barely covering the cost of operating
vessels.

Particularly worried are shipowners that have placed
orders for a new generation of super-sized container vessel due to come
into service from 2010. Such companies are likely to try to delay or
cancel these projects – possibly forfeiting hefty deposits – in order
to avoid taking possession of ships they cannot charter.

Although
Hansa Treuhand is expecting the delivery of 11 ships in the coming
years, they are relatively small and most already have contracts.
Investors' exposure to lower charter rates will be limited, the company
says, as most invest in pools rather than single vessels.

Shipowners emphasise that not all is gloom and doom, notably in
the tanker markets where charter rates have held up. People in the
industry say Hamburg's terminal operators are almost grateful for the
respite after months of operating flat-out.

Moreover, shipping companies are confident that the financial
crisis will not mark the end of globalisation and the rewards it has
brought. "Notwithstanding the current economic deterioration, in the
long term world trade and the shipping industry have an excellent
future," says Hans-Heinrich Nöll, head of VDR, the shipowners'
association.

HISTORY OF BOX SHIFTING:

Ever bigger

Goods
have been moving in stackable steel boxes on ships since 1956 in a
technique that quickly established itself as the main means of shipping
manufactured and semi-finished goods around the world. The idea was
devised by Malcolm McLean, a North Carolina entrepreneur, who saw it as
a way of slashing the time spent in port.

Lines quickly
recognised that it made sense to create vessels far larger than would
ever have been possible with the traditional manual handling methods
used to load and unload older cargo ships. The current question is how
large vessels can become before being impossible to handle.